Rising Middle East tensions threaten to spike global oil prices above $100, an economist warns.

VIENNA, June 15: Economic and financial expert Dr. Bashir Aliya warned on Saturday that escalating tensions in the region could drive global oil prices beyond the $100 mark, following recent Israeli military strikes targeting nuclear and residential sites in Iran.

Speaking to KUNA, Dr. Aliya noted that the global oil market reacted swiftly and sharply to the Israeli attacks. Crude prices surged by seven percent, surpassing $75 a barrel amid growing concerns over potential supply disruptions in the Strait of Hormuz — a critical maritime route through which nearly 20 percent of the world’s oil trade passes, making it a vital artery in global energy markets.

Dr. Aliya highlighted that Brent crude futures climbed to $74.23 a barrel, marking a significant 7 percent increase, underscoring that the market’s response exceeded initial expectations. He further explained that if the tensions persist, oil prices are expected to remain between $78 and $80 per barrel. However, he cautioned that a full-scale escalation could push prices above $100, or even higher.

The economist also emphasized that sustained high prices would be supported by continuous large-scale crude purchases from China and India. Both nations, particularly China, rely on steady economic growth to avoid recession — a priority that has become even more crucial amid ongoing trade tensions with the United States.

Dr. Aliya’s assessment underscores the vulnerability of global energy markets to geopolitical instability in the Middle East, signaling potential challenges ahead for oil supply and pricing.

KUWAIT CITY, June 14: A general policy titled, “Building a Special International Economic Zone”, is listed on the official website ‘New Kuwait’ – specifically under the section for public policies and supporting projects, and directly beneath it is a single associated project – “Developing the Northern Economic Zone.” According to the website, the project is scheduled for completion in 2026, yet the reported implementation rate remains at zero percent. The website defines the project as “the establishment of a zone governed by special laws and regulations designed to attract investment, supported by an independent institutional framework that ensures the attraction of high value-added global investments, fosters innovation, and guarantees transparency in the management of financial resources.”

Progress to date has been limited to activating the agreement between the responsible agency and the People’s Republic of China to prepare the master plan for the Silk Road Project, and proposing legislation and procedures aimed at creating a business-friendly economic zone. No substantial advancement has been recorded since then, until the Cabinet meeting held recently, in which the implementation of the project was reportedly tackled. The newspaper interviewed economists to assess the importance of the Northern Economic Zone and the feasibility of completing it by 2026 — particularly given the recent momentum of reform in Kuwait. Experts emphasized that the launching of the project will be beneficial for the national economy in multiple dimensions, including job creation for newly graduated Kuwaiti youths. Its strategic location near Mubarak Port and the Iraqi-Iranian border was also highlighted as a factor that could significantly boost the long-term success of the zone, likening it to a modern economic free zone. Economists indicated that the government, under its current reform-focused approach, has demonstrated a genuine commitment to diversifying national income sources and addressing future budget deficits by pursuing ambitious development initiatives such as this one. Analyst and economic expert Sultan Al-Jazzaf believes that the Northern Economic Zone will serve the economy in several areas; specifically in terms of giving a significant role to the local private sector, as well as attracting foreign capital, reducing unemployment rates, and helping the State diversify sources of income, especially with expectations of a large deficit in the general budget of the country this year due to the price of a barrel of oil falling below the $68 projected in the budget.

Al-Jazzaf pointed out that this is especially true given that the government estimated the price of a barrel of oil in the current budget at around $68, and considering that its price recently reached $64; this matter highlights the need to rely on sources of support for the economy and the budget other than oil. He praised all the efforts currently being exerted by the government to diversify sources of income, including the Northern Economic Zone project. He stated that the advantages of the zone include its proximity to Mubarak Port, as well as its proximity to the Iraqi and Iranian markets. He said this location will stimulate economic and trade activity with neighboring countries. He is hoping that this project will be implemented as soon as possible, especially since the government has proven, through its proposal, that it is thinking from an economic perspective. “Economic zones, in general, create competitive clusters with the potential to achieve sustainable growth; as they offer many diverse options for good investment opportunities, in addition to their role in trade exchange through the presence of constant activity,” he added.

Economic and real estate expert Qais Al-Ghanim confirmed that the idea of establishing the zone, recently announced by the government, has been delayed significantly. “It should have been implemented in 2003, given its extreme importance to Mubarak Port; taking into consideration it will be a free zone, serving both Kuwait and Iraq, allowing Iraqis to enter the region without a visa — similar to the region located between Syria and Jordan,” he elaborated. He pointed out that the zone will serve the Kuwaiti private sector; thereby, increasing sales for factories and commercial companies, indicating the zone will generate many jobs for young Kuwaiti graduates. Economic expert and former head of Kuwait Contracting Companies Union Dr. Salah Bouresli said the economic zone is a 100 percent sound idea, as it will enhance private sector activity by attracting a wide variety of investments, which will add new value to the State budget through fees.

“Furthermore, it is a major infrastructure project. Its role will not be limited to the economic aspect alone, as it will also create other social benefits, including employing young Kuwaitis and strengthening economic relations between Kuwait and its neighboring countries.” At the same time, he expressed hope that the government will expand green spaces in the zone to include entertainment and service cities, which will stimulate the contracting market, the engineering sector, and many other private sector projects. He believes this zone will lead to a tremendous boom for the Kuwaiti banking sector, which will finance small and large projects established in the zone. “This is in addition to its importance for logistics and warehousing services, especially since this economic zone will enjoy attractive investment laws, considering it will attract more global investments, not just local ones. This is especially true given that global economic cities offer a variety of investments; provide integrated service, logistics and residential facilities; create a competitive business environment; increase government-private partnership projects; and offer major facilities that the government will provide to investors.

By Najeh Bilal
Al-Seyassah/Arab Times Staff 

SHALE oil production in the United States is projected to decline starting next year. From its peak of 13.5 million barrels per day in 2024, output is expected to drop by 200,000 barrels per day from 2026. This certainly comes as disappointing news for the current U.S. administration, which had hoped to maintain the country’s dominance in the global oil market and retain its status as a top producer for years to come, especially amid competition from major producers like Russia and Saudi Arabia. Adding to the administration’s challenges is its failure to achieve a key objective: lowering domestic oil prices. With U.S. production set to decline, the country will become increasingly reliant on foreign imports, even as domestic consumption continues to rise. The U.S. currently consumes approximately 20.5 million barrels per day and imports around 6.1 million barrels, with about 60% coming from Canada, 7% from Mexico, and the remainder from Saudi Aramco, Iraq, and other OPEC nations. 

The administration will also be disappointed by its continued failure in achieving its objective of reducing oil prices. The US will face a growing reliance on foreign imports, even as domestic consumption rises. Currently, the United States consumes approximately 20.5 million barrels of oil per day and imports about 6.1 million barrels daily, roughly 60 percent from Canada, seven percent from Mexico, and the remainder from Saudi Aramco, Iraq, and other OPEC countries. The current U.S. administration appears to be leaning toward continued reliance on fossil fuels, rather than fully committing to alternative energy sources, and encouraging further investment in oil and gas, without focusing on new alternatives. It is perhaps of the opinion that it is still too early to search for replacements for fossil fuels, especially given the goal of keeping energy prices low and avoiding the higher costs often associated with alternative energy.

The United States still holds substantial oil and gas reserves, and there is a growing push to ease permitting processes and open more federal land for exploration. The aim is to become a dominant force in global energy and reduce dependence on foreign oil, while keeping oil prices low as a cornerstone of U.S. energy policy Meanwhile, OPEC countries must begin thinking seriously about developing a long-term strategy that goes beyond oil. Some member states cannot continue relying on oil as their primary source of income, especially when more than 90 percent of their national revenue depends on it. With current low oil prices, many countries are being forced to borrow from international banks or consider monetizing parts of their oil assets, such as selling stakes in national oil companies, as Saudi Aramco has done. There is no harm in selling a small share, whether 5 percent or 15 percent, and it will not affect our “jewel in the crown,” as long as the country retains full control over its wealth and oil resources. Perhaps the choice could be selling assets, divesting ownership stakes, selling shares in international companies, issuing bonds, or simply borrowing. The final decision depends on overall economic factors, expected returns on investment, and the best financial strategies. Fortunately, there are multiple options, and Kuwait can certainly pick and choose the path that it considers is the best. Recently, the confl ict involving Iran caused global oil prices to surge above $75 per barrel in no time. This raises the question – how fragile are oil prices? In this context, OPEC may not need to take immediate action. Let the political situation take over. However, it is likely that the surge in oil prices is only temporary.

By Kamel Al-Harami
Independent Oil Analyst
 Email: [email protected]